Bakun dam: Nasty shock in store for consumers
Kua Kia SoongPublished: Mar 6, 2001 11:05 PM | Updated: Jan 29, 2008 10:21 AM
Malaysians who are all smarting from the announcement of the 50 to 100 percent increase in water tariffs even before the Sungai Selangor dam is ready, should wake up to what's in store for them in electricity tariffs when the Bakun project gets going.
Malaysian consumers should be reminded that we have already paid nearly RM1 billion to the failed businessmen who the Malaysian government told us earlier were capable of handling the Bakun dam project without public money.
Our EPF has also thrown good money down the drain by providing soft loans to these failed Bakun contractors. The worst dividends by EPF since the 1970s can be attributed to these generous soft loans to failed businessmen as well as dubious flings on the stock market.
Malaysian consumers should ask these points of the Bakun project:
Where will the money come from?
Malaysians who are all smarting from the announcement of the 50 to 100 percent increase in water tariffs even before the Sungai Selangor dam is ready, should wake up to what's in store for them in electricity tariffs when the Bakun project gets going.
Malaysian consumers should be reminded that we have already paid nearly RM1 billion to the failed businessmen who the Malaysian government told us earlier were capable of handling the Bakun dam project without public money.
Our EPF has also thrown good money down the drain by providing soft loans to these failed Bakun contractors. The worst dividends by EPF since the 1970s can be attributed to these generous soft loans to failed businessmen as well as dubious flings on the stock market.
Malaysian consumers should ask these points of the Bakun project:
Where will the money come from?
If the Sg Selangor dam project is anything to go by, we see that Puncak Niaga has pulled out of the project and Gamuda is having problems with their road projects as well. Very soon the main contractor will have to be bailed out and the government will explain that theirs is an "essential service".
Although the government claims that the cost of the Bakun project has been cut to less than RM10 billion, international financiers reckon that the cost is closer to RM20 billion. Based on the previous cost breakdown of the Bakun project, the submarine cables made up two-thirds of the total cost. The government now says that, without the cables, the new dam project alone will cut the cost by only one-third. Malaysian consumers should demand an explanation.
The original justification by the government for the Bakun project - that no government funds would be involved - has been violated. We've been told that the project will proceed in stages. What is likely to happen, as with many other such projects, is that these contracts will be farmed out to foreign contractors.
Questioning the costs
Foreign contractors are famously expensive and not necessarily very competent. The British House of Commons Select Committee Report on the Pergau project in Kelantan, another costly dam, concluded that:
"Pergau, at the higher price of 397 million (RM2.2 billion), would be 'a very bad buy' and a burden on Malaysian consumers." (UK National Audit Office, London, Oct 22, 1993)
The contractor for the Pergau dam was Balfour Beatty/Cementation International (See footnote).
On Dec 17, 1990, I raised the scandal of Malaysian consumers having to pay RM1 billion for seven gas turbines at Paka when they should have only cost RM500 million. I have also questioned the cost of the two treatment plants charged by Splash in the Sungai Selangor project, i.e. RM900 million, when they should only cost half that sum. The list goes on ad nauseum.
Our local contractors who get the concessions invariably farm them out to foreign contractors. But these foreign contractors are not necessarily competent. Dong Ah, the South Korean company handling the diversion tunnels at Bakun, is responsible for the collapse of the Songsu bridge in Seoul a few years ago.
Lahmeyer, a consultant in the last Bakun project, was involved in the Chixoy hydroelectric plant at Guatemala, while Harza, another consultant in the last Bakun project, was linked to the problems of the Tarbela dam in Pakistan.
Malaysian consumers should also ask: If the government cannot properly maintain the two dams at Cameron Highlands and Kenyir, which are plagued by heavy siltation and hyacinth proliferation, how are they going to be able to handle the Bakun dam which will be even more prone to soil erosion and siltation?
Tell us the impending electricity tariffs now
The government is the regulator of electricity in the country and should tell consumers the tariffs that will be charged in the near future when the Bakun project gets going. The estimate must be calculated and electricity tariffs must not be sprung on to consumers in the way the water tariffs have been sprung on us recently.
Under the last Bakun project, Ekran was going to sell Bakun power at more than 18 sen when the other independent power producers are already selling at the astronomical 15.5 sen to Tenaga Nasional Berhad (TNB), whose production cost was only 9 sen! If hydro-production is supposed to be so efficient, why should Bakun energy cost so much?
To be fair to consumers, there should be established a Utilities Commission in the country since consumers are at the mercy of highway toll, water and electricity monopolies. To justify tariff increases, there should be public audits of these contractors and concessionaires. As it is, consumers are not compensated when there are so many fiascos involving water and power cuts, muddy water or power surges.
As for the dam projects, there must be comfort guarantees for consumers and downstream residents in the event of a dam collapse or diversion tunnel collapse. Can we sue? Judging by the course of the Highland Towers collapse, that redress is not straightforward.
Consumers demand transparency
Based on the record of the Selangor and Sarawak state governments, they cannot be trusted with costs nor safety because of conflict of interests. The involvement of the children of the Sarawak chief minister in the Bakun project is well known. The fact-finding mission to the resettlement scheme at Sungai Asap to which the Bakun indigenous peoples have been displaced, has uncovered the scandal that they were moved there even when the state government agency had failed to obtain a certificate of fitness for the scheme.
So is the involvement of KDEB, the Selangor state government's subsidiary in the Sg Selangor dam project. Thus far, the emergency response plans of the Selangor and Bakun dams have not been made known to the residents downstream. I have questioned the adequacy of soil tests done on the reservoir site of the Sg Selangor dam and reiterate my call to the federal government to verify these tests.
Consumers deserve a responsible National Energy Policy
The manner in which the Bakun dam has been justified - from the original 2,400MW with submarine cable to West Malaysia, to a downscaled 500MW dam, now back to 2,400MW without submarine cable - smacks of very irresponsible policy making. Almost certainly, no serious attempt has been made to justify the project in terms of energy needs and supply.
The original submarine cables were justified by the claim that Bakun would be supplying West Malaysia. Now we are told that the surplus energy will be used instead for Sabah, Sarawak, Brunei and Kalimantan. Has there been a strong commitment from Brunei and Indonesia or are we just hoping there will be a demand in the future? There is no reason why Indonesia should want our energy when they have access to cheap waxy crude in Kalimantan.
If this homework has not yet been done by the Malaysian government, it is very irresponsible planning and Malaysian consumers will be paying for this folly in the near future.
I have pointed out in my 1996 publication, Malaysia's Energy Crisis: The Real Issues that the problem with the Malaysian energy industry is one of mismanagement. How else do we justify more than 10,000 power breakdowns a year when there is a reserve margin of more than 50 percent? There is also a problem of wrong priorities in favour of independent power producers. This has resulted in a totally irresponsible policy that encourages electricity consumption in order to keep TNB's profit margin healthy rather than encouraging energy conservation.
A responsible National Energy Policy should first produce an energy needs inventory giving reliable data on production and use by domestic and industrial sources, encouraging energy savings and more renewable sources of energy production.
There are other options to trying to be the energy super producer of the region and screaming the Ah-Q-esque 'Malaysia Boleh! We can try to be an energy supermarket instead by relying on cheap Burmese gas, cheap waxy crude from Kalimantan and also cheap power from Thailand. All this cheap power can help to fuel the much talked-about Asean grid.
Whatever happened to the much-touted 'paradigm shift' by our nation's leaders?
Footnote
The building of the hydroelectric dam on the Pergau River in Kelantan began in 1991, partly with funds from the UK foreign aid budget. Concurrently, the Malaysian government bought around 1 billion (RM5.8 billion) worth of arms from the UK. The suggested linkage of arms deals to aid become the subject of a UK government enquiry from March 1994.
In November 1994 a British High Court ruled as illegal British foreign secretary Douglas Hurd's allocation of 234 million (RM1.4 billion) towards the funding of the dam, on the grounds that it was not of economic or humanitarian benefit to the Malaysian people. The dam is the largest aid project ever financed by the UK and the contract was given to British companies Balfour Beatty/Cementation International.
DR KUA KIA SOONG is a director of Suaram, a non-governmental organisation.
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Malaysian consumers should be reminded that we have already paid nearly RM1 billion to the failed businessmen who the Malaysian government told us earlier were capable of handling the Bakun dam project without public money.
Our EPF has also thrown good money down the drain by providing soft loans to these failed Bakun contractors. The worst dividends by EPF since the 1970s can be attributed to these generous soft loans to failed businessmen as well as dubious flings on the stock market.
Malaysian consumers should ask these points of the Bakun project:
Where will the money come from?
If the Sg Selangor dam project is anything to go by, we see that Puncak Niaga has pulled out of the project and Gamuda is having problems with their road projects as well. Very soon the main contractor will have to be bailed out and the government will explain that theirs is an "essential service".
Although the government claims that the cost of the Bakun project has been cut to less than RM10 billion, international financiers reckon that the cost is closer to RM20 billion. Based on the previous cost breakdown of the Bakun project, the submarine cables made up two-thirds of the total cost. The government now says that, without the cables, the new dam project alone will cut the cost by only one-third. Malaysian consumers should demand an explanation.
The original justification by the government for the Bakun project - that no government funds would be involved - has been violated. We've been told that the project will proceed in stages. What is likely to happen, as with many other such projects, is that these contracts will be farmed out to foreign contractors.
Questioning the costs
Foreign contractors are famously expensive and not necessarily very competent. The British House of Commons Select Committee Report on the Pergau project in Kelantan, another costly dam, concluded that:
"Pergau, at the higher price of 397 million (RM2.2 billion), would be 'a very bad buy' and a burden on Malaysian consumers." (UK National Audit Office, London, Oct 22, 1993)
The contractor for the Pergau dam was Balfour Beatty/Cementation International (See footnote).
On Dec 17, 1990, I raised the scandal of Malaysian consumers having to pay RM1 billion for seven gas turbines at Paka when they should have only cost RM500 million. I have also questioned the cost of the two treatment plants charged by Splash in the Sungai Selangor project, i.e. RM900 million, when they should only cost half that sum. The list goes on ad nauseum.
Our local contractors who get the concessions invariably farm them out to foreign contractors. But these foreign contractors are not necessarily competent. Dong Ah, the South Korean company handling the diversion tunnels at Bakun, is responsible for the collapse of the Songsu bridge in Seoul a few years ago.
Lahmeyer, a consultant in the last Bakun project, was involved in the Chixoy hydroelectric plant at Guatemala, while Harza, another consultant in the last Bakun project, was linked to the problems of the Tarbela dam in Pakistan.
Malaysian consumers should also ask: If the government cannot properly maintain the two dams at Cameron Highlands and Kenyir, which are plagued by heavy siltation and hyacinth proliferation, how are they going to be able to handle the Bakun dam which will be even more prone to soil erosion and siltation?
Tell us the impending electricity tariffs now
The government is the regulator of electricity in the country and should tell consumers the tariffs that will be charged in the near future when the Bakun project gets going. The estimate must be calculated and electricity tariffs must not be sprung on to consumers in the way the water tariffs have been sprung on us recently.
Under the last Bakun project, Ekran was going to sell Bakun power at more than 18 sen when the other independent power producers are already selling at the astronomical 15.5 sen to Tenaga Nasional Berhad (TNB), whose production cost was only 9 sen! If hydro-production is supposed to be so efficient, why should Bakun energy cost so much?
To be fair to consumers, there should be established a Utilities Commission in the country since consumers are at the mercy of highway toll, water and electricity monopolies. To justify tariff increases, there should be public audits of these contractors and concessionaires. As it is, consumers are not compensated when there are so many fiascos involving water and power cuts, muddy water or power surges.
As for the dam projects, there must be comfort guarantees for consumers and downstream residents in the event of a dam collapse or diversion tunnel collapse. Can we sue? Judging by the course of the Highland Towers collapse, that redress is not straightforward.
Consumers demand transparency
Based on the record of the Selangor and Sarawak state governments, they cannot be trusted with costs nor safety because of conflict of interests. The involvement of the children of the Sarawak chief minister in the Bakun project is well known. The fact-finding mission to the resettlement scheme at Sungai Asap to which the Bakun indigenous peoples have been displaced, has uncovered the scandal that they were moved there even when the state government agency had failed to obtain a certificate of fitness for the scheme.
So is the involvement of KDEB, the Selangor state government's subsidiary in the Sg Selangor dam project. Thus far, the emergency response plans of the Selangor and Bakun dams have not been made known to the residents downstream. I have questioned the adequacy of soil tests done on the reservoir site of the Sg Selangor dam and reiterate my call to the federal government to verify these tests.
Consumers deserve a responsible National Energy Policy
The manner in which the Bakun dam has been justified - from the original 2,400MW with submarine cable to West Malaysia, to a downscaled 500MW dam, now back to 2,400MW without submarine cable - smacks of very irresponsible policy making. Almost certainly, no serious attempt has been made to justify the project in terms of energy needs and supply.
If this homework has not yet been done by the Malaysian government, it is very irresponsible planning and Malaysian consumers will be paying for this folly in the near future.
I have pointed out in my 1996 publication, Malaysia's Energy Crisis: The Real Issues that the problem with the Malaysian energy industry is one of mismanagement. How else do we justify more than 10,000 power breakdowns a year when there is a reserve margin of more than 50 percent? There is also a problem of wrong priorities in favour of independent power producers. This has resulted in a totally irresponsible policy that encourages electricity consumption in order to keep TNB's profit margin healthy rather than encouraging energy conservation.
A responsible National Energy Policy should first produce an energy needs inventory giving reliable data on production and use by domestic and industrial sources, encouraging energy savings and more renewable sources of energy production.
There are other options to trying to be the energy super producer of the region and screaming the Ah-Q-esque 'Malaysia Boleh! We can try to be an energy supermarket instead by relying on cheap Burmese gas, cheap waxy crude from Kalimantan and also cheap power from Thailand. All this cheap power can help to fuel the much talked-about Asean grid.
Whatever happened to the much-touted 'paradigm shift' by our nation's leaders?
Footnote
The building of the hydroelectric dam on the Pergau River in Kelantan began in 1991, partly with funds from the UK foreign aid budget. Concurrently, the Malaysian government bought around 1 billion (RM5.8 billion) worth of arms from the UK. The suggested linkage of arms deals to aid become the subject of a UK government enquiry from March 1994.
In November 1994 a British High Court ruled as illegal British foreign secretary Douglas Hurd's allocation of 234 million (RM1.4 billion) towards the funding of the dam, on the grounds that it was not of economic or humanitarian benefit to the Malaysian people. The dam is the largest aid project ever financed by the UK and the contract was given to British companies Balfour Beatty/Cementation International.
DR KUA KIA SOONG is a director of Suaram, a non-governmental organisation.
Related articles:
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